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Paying off your car early
Pros, cons, and my own experience
When I graduated from college, I didn’t own a car. Living in cities like Boston and New York, I’d never needed one. But my first job was in a rural area. So all of a sudden… I needed a car.
I considered buying a used vehicle, to save money, but I didn’t know anything about cars so decided a new one would be a safer bet.
Unfortunately, that meant I had to take out an auto loan. This was in the late ’80s, and interest rates were pretty high. I was already on the hook for paying student loans, so adding a car payment to that seriously impacted my monthly budget. Given the situation, I thought it made sense to get that car paid off as soon as possible.
Maybe you’re in the same position and would like to pay off your auto loan early? However, while this seems like a no-brainer, there are several things to consider before you jump in to pay off your vehicle.
Benefits of early payment
● You may save money paid on interest. After all, you only get charged interest for outstanding debt, right? Maybe not. You need to read the terms of your loan — if you have a fixed interest loan, for example, you are on the hook to pay off a the fixed amount regardless. However, in most cases, accelerating your payment…
